Building and Construction
Infrastructure paves the path for AEC As the AEC draws near, ASEAN countries are gearing up for transitional challenges and a windfall of opportunities expected with it. Figuring largely in the AEC is infrastructure development, which is necessary to accelerate economic integration within the region, says Angelica Buan in this report.
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he Association of Southeast Asian Nations (ASEAN) members comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, are a leap away from the region’s ambitious goal of becoming the ninth largest economy in the world. The establishment of the ASEAN Economic Community (AEC), a regional economic integration by 31 December 2015, will mark a milestone in international integration of the ten Southeast Asian member economies. The blueprint signed by ASEAN leaders during the 13th ASEAN Summit held in 2007 envisions ASEAN, with its 600 million population and annual GDP of US$ 2 trillion, as a highly competitive region, fully integrated with the global economy. Modelled after the European Union (EU) styled single-market economy, AEC is intended to enhance the national competitiveness of its members in preparation for a more open regional market economy in line with the World Trade Organisation’s commitments and free trade pacts, such as the Trans-Pacific Partnership (TPP) and an EU Free Trade Agreement. With the AEC, the region is expected to become a single market and production base that will allow for free movement of goods, services, investment, capital and skilled labour. The AEC is expected to have far-reaching economic consequences, by significantly promoting intra-ASEAN trade and investment and strengthening the global importance of the ASEAN as an economic block. More than 50% of Asia’s exports are intra-regional, and the economic expansions in China and India are expected to boost intra-regional trade further.
Is ASEAN ready for the AEC? Beyond the promise of progress, the question of readiness clouds the bright prospects of the AEC. Observers say that there is still a lot of groundwork to be done since targets set for AEC are unlikely to be achieved on time. Most AEC-related reforms require changes in procedures, customs and coordination of government bodies. For instance, Professor Hidetoshi Nishimura, Executive Director of the Economic Research Institute for ASEAN and East Asia (ERIA), says that regional countries should accelerate comprehensive reform, pay due attention to the private economic sector and ensure effective coordination among government agencies. He adds that the AEC building plan should concentrate on improving administration mechanisms and broader institutional reform, which are considered big challenges for many countries. At a recent AEC Council Meeting held in Myanmar, the AEC scorecard indicated that about 81.7% of the 229 priority key deliverables targeted for completion by 2013 have been reached. However, besides the respective countries’ abilities to raise competitive capacity and facilitate trade liberalisation to meet requirements, upgrading infrastructure is another bottleneck. The Master Plan on ASEAN Connectivity (MPAC) cites that the ASEAN, with a total land area of around 4.4 million sq km, is handicapped by “poor quality of roads and incomplete road networks”. Infrastructure development Within the region, varying degrees of preparation are also taking place, yet infrastructure is commonly given the larger weight among all other pre-AEC logistic efforts.
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SEPTEMBER 2014